Consumer boom gone and never coming back

Despite the efforts of retailers to get us spending, this year's Christmas shopping spree is shaping up as modest, rather than spectacular.

About one-third of us plan to spend less on gifts than last year, a Westpac survey found. Half of us plan to spend the same amount, and just 13 per cent plan to spend more.

Shock, horror! Only about one in eight shoppers plans to spend more this year than last. It sure sounds like more grim news for the retail industry.

However, it turns out these survey results are about the same as those from 2010 and 2011. Separate figures also show economy-wide spending is growing, just more slowly than in the past.

All of which raises the question: is consumer gloom to blame for the weakening economy? Or is the more cautious attitude of consumers a return to business as usual?

As this week's graph shows, confidence is indeed well below the highs of last decade. But it's hardly hit rock-bottom. In fact, the current level of consumer confidence is pretty close to its average since the 1970s.

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Consumers haven't gone on a spending strike, either. Spending is growing in line with income, by about 3 per cent a year, rather than the blistering annual pace of 6 per cent during the mid-2000s.

Without question, consumers are being more frugal than during the great consumption boom of last decade.

But with the benefit of hindsight, it's clear the heady days of sky-high confidence and spending during the mid-noughties were unusual.

As the Reserve Bank governor, Glenn Stevens, puts it, consumer behaviour has gone back to what was once considered to be ''normal''.

''It is not actually that consumers have no income to spend, nor that their confidence levels are that low, nor that their saving rate is that high,'' Stevens says.

This reversion to slower spending growth is probably one reason we're not as upbeat as in the past.

It also makes life much harder for many business people, especially those in retail.

But it also seems clear the boom days from before the global financial crisis were abnormal and aren't coming back. Perhaps it's time we all got used to slower spending growth.